Grains continue recent uptrend

Grabanski is president of Progressive Ag, a Fargo, N.D.-based hedge brokerage firm. Reach him at 800-450-1404.

Wheat

Wheat contracts had smaller gains last week, but were able to continue the recent uptrend. The markets have been due for some profit taking, and the U.S. Department of Agriculture Outlook Conference put a lid on the market at the end of the week. For the week, May Minneapolis gained 9 cents, May Chicago was up 12 cents and May Kansas City gained 13 cents.

Wheat started the week Feb. 18 with strong gains. Support spilled over from the other grains (corn and soybeans) as both those markets rallied sharply higher in an attempt to limit demand. Additional support came from concerns that the Southern Plains wheat has been damaged from extremely cold winter conditions that have plagued most of the central U.S. this winter. Commercial demand remains strong and that has helped add strength to wheat.

The wheat markets continued to have steady gains Feb. 19 with support coming from continued commercial buying. Canadian transportation issues have commercial buyers trying to source most of their current needs in the U.S. market, and U.S. farmers have not been quick to let go of their grain. While the trend is clearly higher, the large Canadian wheat stocks will still be there when they get their transportation issues figured out. U.S. farmers should look to take advantage of the strong basis for hard wheat in the current timeframe.

The wheat markets traded on both sides of unchanged Feb. 20 in a quiet trading day. News was light, and commercial buying slowed down. Early estimates from USDA’s annual Outlook Conference have 2014 wheat acres at 55.5 million, down from 56.2 million acres in 2013. Feb. 21 trade brought 4 to 5 cent losses as traders focused on slow export shipments and a lightly bearish USDA Outlook Conference. Profit taking also took place Feb. 21 after almost three weeks of gains in the wheat markets.

USDA estimated wheat export inspections pace for the week ending Feb. 14 at 9.8 million bushels. This brings the year-to-date export shipments pace for wheat to 850.9 million bushels, compared with 657.2 million at this time last year. Wheat export sales pace for the week ending Feb. 14 was estimated at 18.1 million bushels, above the 10.8 million needed to keep pace with USDA projections. This brings wheat’s export sales pace for the year to 1.018 billion bushels, compared with 821.1 million last year. Shipments of 10.2 million bushels were below the 23.9 million needed to keep pace with projections.

Corn

The corn market traded up to levels last seen in late October and back above $4.50. Support came from unrest in the Ukraine and lack of farmer selling. USDA also increased its export number in this month’s report and traders are expecting to see a smaller acreage number in 2014. As of noon on Feb. 21, the March contract was up 8.5 cents for the week.

The corn market traded higher throughout the session on Feb. 21 with spillover support from strong gains in soybeans and positive outside markets. Political protests in the Ukraine have traders thinking grain exports might be slowed from that region, potentially helping U.S. exports that have been strong recently. A lack of producer selling in the U.S. is helping, as well.

The corn market traded slightly lower the morning of Feb. 20 but firmed back up into the afternoon. Early weakness came from profit taking as the futures are trading at the upper end of the range and near a four-month high. The futures did work back to trade with green ink by late morning. The ethanol report did show an increase of corn usage over the previous week, but stocks also grew. At the Outlook Forum, USDA projected corn acres to decline in 2014 to 92 million acres from 95.4 million in 2013, with a yield of 165.3 bushels per acre and total production at 13.38 billion bushels. The ending stocks are estimated at 2.111 billion bushels for the 2014 crop year. This news added pressure to the corn futures on the morning of Feb. 21.

Ethanol production for the week ending Feb. 14 averaged 903,000 barrels per day, up 0.11 percent from the previous week. Total ethanol production for the week was 6.32 million barrels. Corn used in production is estimated at 94.82 million bushels and needs to average 97.35 million bushels per week to meet this crop year’s USDA estimate of 5 billion bushels. This crop year’s cumulative corn used for ethanol production is 2.25 billion bushels. Stocks were 17.2 million barrels, up 0.83 percent from the previous week.

USDA’s export inspections report was bearish for corn at 32.6 million bushels versus the 34.4 million USDA has estimated for each week. Trader estimates ranged from 20 million to 36 million bushels. The corn export sales were estimated at 27.4 million bushels, which was well above the 7.9 million needed to stay on pace with USDA’s estimate of 1.6 billion. The shipments came in at 29.6 million bushels and below the 33.9 million needed each week to meet USDA’s estimate.

Soybeans

Soybeans continued higher last week as export demand remained strong. Heavy Chinese cancellations have not yet occurred, so the markets are forced to ration U.S. supplies until that time comes. As of the Feb. 20 close, March soybeans were 20.75 cents higher for the week, while the November contract gained 14.75 cents.

Soybeans traded higher to start the week Feb. 18, following lighter-than-expected rain in dry regions of southern Brazil over the weekend. Strong Chinese and commercial demand continued to support tight old-crop soybeans as expectations for Chinese cancellations fail to be met. National Oilseed Processors Association crush numbers for January came in at 156.9 million bushels, which was below the expected range of 160 million to 165 million. Export inspections were bullish, coming in above the amount needed to keep pace with USDA’s projection.

Soybeans traded lower Feb. 19, despite gains in wheat and corn. Traders expressed caution as March soybeans have been approaching the September high of $13.78. Demand for U.S. soybeans remains strong, but it is unclear whether that demand is strong enough to warrant making new post-harvest highs. Noncommercial traders are holding a large long position, so profit taking by those traders could serve to limit gains. Southern Brazil remains dry, while scattered showers are forecasted for this weekend.

Soybean trade was mixed early on Feb. 20, following some follow-through selling overnight. The market moved higher after USDA announced expectations for 79.5 million planted acres in 2014, which was fewer than expected by most traders. Tight old-crop supplies, strong demand and decent South American weather continue to fight for control of the market while traders wait for fresh news to provide direction.

USDA reported soybean export inspections pace for the week ending Feb. 14 at 54 million bushels. This brings the year-to-date export shipments pace for soybeans to 1.27 billion bushels, compared with 1.078 billion for last year at this time. Soybean export sales pace for the week ending Feb. 14 was estimated at 3.2 million bushels. This brings soybean’s export sales pace for the year to 1.588 billion bushels, compared with 1.246 billion last year. With 28 weeks left in soybean’s export marketing year, sales are above USDA’s projection of 1.51 billion bushels.

Barley

USDA estimated barley export inspections pace for the week ending Feb. 14 at 13,700 bushels. This brings barley’s export shipments pace to 6.459 million bushels, compared with 5.617 million last year. No net sales were reported for barley. Shipments of 700 million tons were reported to Taiwan. For the week ending Feb. 20, cash feed barley bids in Minneapolis were unchanged at $3.70 per bushel, while malting barley was unchanged at $5.65.

Durum

There were no export inspections or export sales reported for durum for the week ending Feb. 14. As of the Feb. 20 close, cash bids for milling quality durum were unchanged on the week at $7 per bushel in Berthold while Dickinson’s bid was unchanged at $6.80.

Canola

As of the Feb. 20 close, March canola futures on the Winnipeg, Manitoba, exchange were $13 (Canadian) higher on the week at $411.20 (Canadian). Canola futures moved higher on the week with support provided by short covering and weakness in the Canadian dollar. Ongoing logistical problems and farmer selling pressured the market while Chicago Board of Trade soybean and soyoil futures provided additional support. As of the Feb. 20 close, cash canola bids in Velva, N.D., were 47 cents higher on the week at $17.10 per hundredweight.

Sunflowers

Soybean oil export sales pace for the week ending Feb. 14 was estimated at 11.7 thousand metric tons. This brings the year-to-date export sales pace for soybean oil to 531 thousand metric tons, compared with 794.3 thousand for last year. As of the Feb. 20 close, July soybean oil was up $1.42 for the week at $40.57 per hundredweight. Cash sunflower bids in Fargo, N.D., were 20 cents higher for the week at $19.75 per hundredweight.